Tezos’s Tenderbake Upgrade Goes Live, Here’s How XTZ can React

Key Insights:

• Tezos has deployed a major upgrade, changing its consensus algorithm.
• The upgrade could facilitate lower block times, produce faster transactions, and smoother-running applications.
• Despite the ecosystem-centric updates, XTZ is down 55.37% from its ATH.

Tezos – a decentralized open-source blockchain, recently activated a significant upgrade, changing its consensus algorithm in its ninth upgrade.

Improved Performance

Tezos is a proof-of-stake blockchain that can execute peer-to-peer transactions and serve as a platform for deploying smart contracts. A recent press release revealed that the upgrade is code-named Ithaca 2 and replaces the current consensus algorithm, known as Emmy, with Tenderbake.

The new upgrade is set to enable lower block times, producing faster transactions and smoother-running applications. As part of Ithaca 2, the Tezos blockchain prepares for scalability efforts, including rollups for WebAssembly and Ethereum Virtual Machine (EVM) compatibility and pre-checking, an efficiency-enhancing validation scheme.

The Ithaca 2 upgrade also aims to reduce the requirement to become a network validator by 25% from 8,000 tez (the Tezos digital token) to 6,000 tez, making the network’s decentralization stronger.

Most importantly, the new Tenderbake consensus algorithm enables lower block times, resulting in faster transactions and smoother-running dAapps on Tezos.

Tezos’s Growth and XTZ’s Rise

Tezos’s growth over the last year has been up to the mark with growth both in terms of user activity and the price rise of its native token XTZ. Data suggests that smart contract calls increased per month from 100,000 in January 2021 to over 6.2 million in January 2022.

Furthermore, Tezos saw key market integrations with brands such as Red Bull Racing, Manchester United, The Gap, and Kia. Notably, Tezos’s price saw no significant uptick at the time of writing despite the positive market momentum and ecosystem-centric upgrades.

Tezos traded at $3.78, noting 0.92% daily and 7.25% weekly gains. XTZ’s relative strength index on a one-day chart was oscillating in the oversold zone, signifying higher buying pressure in the market. Still, there was no significant price implication of the same.

With BTC and the larger market’s momentum looking rangebound at press time, XTZ could witness some short-term pullback. Nonetheless, with the network developing XTZ’s price in the long term could see a decent push.